New Court Documents Reveal SEC and Gary Gensler’s Belief That Ether Was Deemed a Security for Over a Year
New court documents have shed light on the United States Securities and Exchange Commission (SEC) and its Chair Gary Gensler’s belief that Ether (ETH) was considered a security for a significant period of time. According to a complaint filed by Consensys Software Inc., the SEC Director of Enforcement Gurbir Grewal initiated an investigation into “Ethereum 2.0” on March 28, 2023. The investigation was focused on potential offers and sales of certain securities, including ETH, which were conducted without proper registration or exemption.
This finding contradicts the SEC’s previous stance on ETH, as they had approved ETH Future ETFs in October 2023. Gensler, who had remained relatively silent on the classification status of ETH, has faced criticism for the agency’s regulatory approach. In June 2028, the SEC’s then-Director of Corporation Finance, Bill Hinman, made a speech claiming that ETH was not a security.
The court documents reveal that the SEC is currently investigating Consensys’ offers and sales of ETH to determine if they should be classified as securities transactions. Consensys has been requested to provide a statement explaining why they believe their ETH sales are not securities transactions.
Prior to this revelation, Consensys had already filed a lawsuit against the SEC for their attempt to regulate ETH as a security. In a blog post, Consensys founder Joe Lubin argued against the SEC’s expanding jurisdiction and stated that their approach is causing chaos for developers, market participants, institutions, and nations relying on Ethereum.
In recent weeks, it has been reported that several companies associated with the Ethereum Foundation have been subpoenaed to provide information to a Swiss non-profit. Additionally, the foundation has been contacted by an undisclosed state authority. With Consensys receiving a Wells notice on April 10, it is likely that the SEC will take legal action against them in the near future.
